PCE Data to Gauge Impact on Markets and Trump's Midterm Prospects

The final quarter of 2026 may be shaped by today's financial market tone. The timing could prove uncomfortable for Donald Trump as voters concentrate on price increases only weeks ahead of the US midterm elections.

• PCE inflation: This indicator, the Fed's favored measure, tracks price shifts in actual US consumer spending. Consensus forecasts put headline inflation steady at 3.7%, core PCE at 3.3%, and a 0.3% month-on-month rise.
• Q2 GDP: A third estimate of April-to-June economic expansion is due from the US. The prior reading was 1.5% annualized, with markets anticipating minimal revision.
• Why it matters: This month saw the Fed hike rates for the first time in three years. Today's figures could determine whether another October rate increase follows.
• The bigger test: Elevated inflation might drive bond yields upward, hitting stocks and crypto again. A weaker reading could test a major Wall Street trade from September.

US economic prints to watch this week:

💠Core PCE (Wed, 8:30 am ET): YoY: 3.3% prev, 3.4% est | MoM: 0.2% prev, 0.3% est

💠GDP Q2 (Wed, 8:30 am ET): 1.5% prev, 1.5% est

💠S&P Global Mfg PMI (Thu, 9:45 am ET): 57.0 prev, 57.0 est

💠ISM Mfg PMI (Thu, 10:00 am ET): 54.6 prev,…

— Lark Davis (@LarkDavis) September 30, 2026

Crypto Has Already Taken the First Hit

Early Wednesday, bitcoin was trading near $84,000, with most leading cryptocurrencies still under strain.

A portion of today's negative news is already factored in. Market participants are aware that inflation is anticipated to remain significantly above the Fed's 2% goal, and expectations have already swung heavily toward additional rate increases.

Consequently, a core PCE figure of 0.3% might generate only modest surprise.

A reading of 0.4% or 0.5% would be another matter. It might reinforce bets on more Fed tightening, push Treasury yields higher, and exert renewed downward pressure on bitcoin and riskier altcoins.

A 0.2% figure could set off the opposite reaction. Traders could begin to doubt if the recent rate increase has been excessive.

Stocks Face the Same Problem

The bond selloff has been handled with surprising resilience on Wall Street.

The S&P 500 is still near its recent peaks, despite the 10-year Treasury yield topping 5%. Since July, the yield has gained approximately 81 basis points and recently hit a 19-year high.

Equities declined on Tuesday, with the S&P 500, Dow, and Nasdaq all in negative territory. A fresh hot inflation figure would challenge the durability of that resilience.

What is happening here.

The bond market is now pricing-in 4 more 25 basis point rate hikes by June 2027, a total of +125 basis points including September's hike.

Just 9 months ago, markets had expected at least 100 basis points of rate CUTS by June 2027.

That's a +225 basis…

— The Kobeissi Letter (@KobeissiLetter) September 29, 2026

Trump Has a Different Problem

That same inflation data arrives a little more than a month ahead of November's midterm elections.

Last week, a Reuters/Ipsos survey showed Trump's approval at 32%, the lowest point in his political career.

According to Reuters, increasing prices have emerged as a significant political challenge, with about half of voters identifying the cost of living as the top issue in the congressional races.

Consumer sentiment has also dropped to a 12½-year low, as households contend with costly fuel, groceries, and borrowing expenses.

The PCE report alone will not determine an election outcome.

However, if inflation remains stubbornly high while rates continue to climb, voters are presented with another economic figure that aligns with what many already experience at the register and the pump.

This makes the release a test that extends well beyond Wall Street.